Wednesday, September 16, 2009

RED day trade 84 to 92

Summary of 16 September Trades - RED alert

My bias for shorts are continuing to haunt me, and trying to predict a top is becoming a very treacherous activity. I have found that my swing position trades are not very profitable atm (and I will do an analysis on this after 100 trades).

I think that I have a much better feel for a day's trade when I am trading only on a intra-day basis on my gft account, and I will try to close out all my positions at the end of each day, over the next few weeks, unless I have a position that is trending exceptionally well.

One of the biggest factors that became non factors in my shorting strategy were momentum, falling TICK, relative value.

Normally, the above indicators are good way of telling me in advance that the market will respond with a closing of the divergence - however, today's divergences continued to get wider, or at best, the prices only moved marginally in my favour, where I twice missed my exit prices on the ASX short trades.

Trade 87 + 88: shorting MQG whilst ASX is breaking into new highs
This was seriosuly the most dumbfounded move I've made to date so far - why in the heck I would be bearish on a day where the ASX is making new highs is baffling me even as I write. MQG always exaggerates the moves in which the ASX moves - and on today's upward thrust, MQG would've been the perfect long - trying to fade this move was just terrible judgement on my part. I completely compounded this error by doubling more MQG at a higher price, using the market depth as justification; however a deeper analysis into market depth made me realise the large QTY sell orders were being rapidly taken up by smaller buy orders - a large buy order at any price is completely deceiving if the market is getting bombarded by retail investors buying anything, at any price.
A made 3 mistakes on the same stock today, when I re-entered the position (very stubborn) later in the day, hoping for a day's end fade (on relative analysis based on falling ASX) - more on this below.

Trade 87 + 88 = short 100@50.37 + 100 @50.71 - exit 200@50.81
Trade 92 = short 100@50.63 - exit 100@51.29

Trade 92: This was just a pure moment of insanity, where my irrational mood took over - there was no solid exit plans, or price targets, without even a time frame for how long I wanted to hold it. There was a loose catalyst of relative falling ASX - but I should've restricted my trade to the ASX alone in the environment where I was trying to buck the trend.

Trade 87,88,92 MQG result = -$147.42

Trade 89,90,91: Trading the ASX for a fade
This trade actually had much more rationale for it, now that the loss of the day has sunk in, I don't believe it was such a bad trade.

1/ TICK was falling
2/ Risk/reward was appealing on analysis - although the target was quite unreasonable given the upward bias in the market due to market making new highs.
3/ china was falling
4/ MSCI reweighting which was going to see a selloff in the ASX over the next few sessions.
5/ MACD was falling

I entered Trade 89 out of a breakout of a congested top 4629, and the market retraced slightly into the middle of the price range where I entered Trade 90 picking up more shorts on this trade, I was very comfortable with the level of risk on this pickup, as the stop loss was 4644. So Trade 90 3 contracts ASX short 4634

The market fell out of the range nicely, however the move was shortlived as the best exit price I would've attained was 4621.5 - I'm thinking that maybe trade 90 - this is a target that made sense risk/reward, and also in terms of managing my trade as I saw the buyers come in rapidly when the market hit the structural intraday level of 4619.5

When the market failed on the breakout and started back upwards, the TICK reading trending lower made me believe that I should pick up some more - but the price moving back into the congested zone should've given me a superceding warning.

Stubbornly I entered trade 91 on the fade play, once again due to low TICK readings and possible retracement below the moving average, but the market showed a lot of reslience (although not huge strength).

When the prices hit my stop, i exited 6@4646.5 and 3@4645.5

Trade 89-91 ASX result = -$105

I also closed of trade 86 and 84, BHP and RIO for losses of -$96.51+ -$121.41.